Rheinmetall’s €14 Billion Frigate Bid and Record Backlog Can’t Arrest 30% Share Price Decline

Rheinmetall shares slide 30% YTD to €1,123.80, nearing €1,100 support, even as analysts see overdone sell-off and record €135B backlog fuels bullish calls.

The numbers look stellar on paper. Rheinmetall is sitting on an order backlog that could swell to €135 billion by the end of next year, and management has just pitched the German government on a €14 billion project to build six new frigates. Yet the stock continues to bleed: shares closed Friday at €1,123.80, down 2% on the day and dangerously close to the 52-week low of €1,118.00. Since January, the defence group has shed nearly 30% of its market value.

The Düsseldorf-based company wants to take over as lead contractor for a new frigate class, the largest naval programme currently on the table in Germany. If accepted, Rheinmetall would step in for the Dutch yard Damen, which has been struggling with delays. The offer represents a bold push into a segment the company only recently expanded through the integration of several northern German shipyards, including the historic Blohm+Voss site. Some 2,100 employees moved into the new Naval Systems division.

Analysts believe the sell-off has gone too far. Warburg Research upgraded the stock to “Buy”, calling the current level a clear entry opportunity. Across the Atlantic, Barclays maintained its “Overweight” rating, arguing the correction is exaggerated given an intact long-term European defence cycle. Bernstein Research, meanwhile, sticks to a price target of €1,900, a level last seen when the stock flirted with €2,000 last autumn. All three houses point to the gap between operational momentum and market sentiment.

Management confirmed its full-year guidance for 2026, targeting revenue of around €14 billion to €14.5 billion and an operating margin of roughly 19%. Chief executive Armin Papperger expects a sharp acceleration in growth during the current second quarter, driven by large-scale orders in the naval and vehicle businesses. The company’s first month of naval systems reporting — March — already contributed €77 million to group revenue, largely from state shipbuilding programmes.

Shareholders received some concrete reward on Friday when a dividend of €11.50 per share was paid out, a marked increase from the previous year and a reflection of the company’s solid cash position. The payment was approved at a virtual general meeting held in mid-May.

The chart tells a different story. The key technical support at €1,100 now looms large. If that level breaks, further selling pressure is likely. A detailed set of summer-quarter results is due in August and could provide the catalyst the stock desperately needs to reverse course. Until then, the disconnect between a record order book and a bruised share price remains the defining narrative.